“A takeover, not a merger”: IP Group’s £500m bid turns hostile
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“He told me the term ‘merger’ had been used, but that this was in fact a ‘takeover’”, Touchstone Innovations’ chairman David Newlands has told his shareholders in a letter as IP Group’s £500m takeover bid goes publicly hostile.
IP Group went public on its bid for its rival technology commercialisation company on May 23, which Touchstone Innovations’ board had unanimously rebuffed.
The target company “creates, builds and invests in pioneering technology companies and licensing opportunities developed from outstanding scientific research”, focusing on an area that includes London, Cambridge and Oxford.
IP Group, which is also raising £200m from investors, has offices in Leeds and London and has backed University of Leeds spin-outs Tracsis, Tissue Regenix and Xeros, plus University of Sheffield spin-out Diurnal Group.
It believes combining the two businesses “would create an international leader in IP commercialisation and an enlarged business with substantial capabilities that would be greater than the sum of the two parts”.
But Newlands said that despite meetings being held, two sticking points remained unresolved.
He argued the offer “did not fully reflect” the value in Touchstone which has been built up over 10 years and the strength of its portfolio and relationships. Newlands also said there was no agreement on the need “to establish a clear understanding of joint strategy, corporate governance and management” which led to the telephone conversation with IP Group chairman Mike Humphrey that made it clear it was a takeover.
Newlands added: “An important test for us was whether the combined organisation was one where our staff, particularly our ventures investment team, would have been attracted to stay.
“Our belief was that the Possible Offer, which ignores the importance of retention and incentives, risked seeing this team dissipate and, along with it, the associated network of partners, co-investors and entrepreneurs.”
The offer is for 2.1490 IP Group shares for each Touchstone share. IP Group’s bid values Touchstone at 307p per share, with a cap of 320p.